PACCAR Reversal PRomised Again: A Long-Awaited Step for Funders and Claimants

The Ministry of Justice has once again promised legislation to undo the 2023 Supreme Court PACCAR ruling—a move that funders and claimants have been awaiting for over two years. PACCAR left percentage-based litigation funding agreements classified as damages-based agreements (DBAs), creating uncertainty in how funders could structure deals and limiting investment in collective actions and smaller claims alike.

This isn’t the first attempt to resolve the issue. In March 2024, the Ministry of Justice introduced the Litigation Funding Agreements (Enforceability) Bill to clarify that LFAs are enforceable and not DBAs. The bill progressed through committee stages in the House of Lords, including debates over its retrospective effect. But in May 2024, the Bill stalled due to the General Election, leaving the PACCAR problem unresolved and creating continued uncertainty for funders and claimants alike.

While funders have adapted (using multiple-based fees rather than percentages of damages, for example) it is far from an ideal situation. The ability to structure agreements proportionately and to tailor returns to the specific risks of a case remains constrained. High-profile “David vs Goliath” examples, like the Post Office sub-postmasters, illustrate why funding flexibility is vital: without access to third-party funding, ordinary claimants cannot challenge powerful organisations effectively.

The PACCAR reversal also intersects with broader reforms highlighted in the Civil Justice Council’s 2025 Final Report. Recommendations around light-touch regulation, transparency, and proportionality in funding are likely to shape how the market operates once certainty returns. Until the legislation is enacted, funders will continue to navigate a cautious path, claimants may face barriers to funding, and practitioners must monitor developments closely to advise on both funding and alternative options.

For funders and claimants alike, clarity on PACCAR cannot come soon enough. A reversal on the decision could restore proportionality and confidence in the UK litigation funding market.